Forex Market Review – Euro falls as Greek debt deal not reached yet

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Euro slipped lower on Monday weighed down by uncertainty over the Greek bailout talks. Greek policy makers failed over the weekend to agree on tough austerity measures needed to persuade international creditors to approve a second bailout package.

EURUSD gapped down to open the week lower at 1.3112 and slid to a European session low of 1.3029, breaking past Friday’s lows. Euro then stabilized on hopes that an agreement will be reached, considering that the main frame of the debt agreement has been agreed upon so far. This helped support the pair above the key $1.30 level, helped by some positive data from Germany showing manufacturing orders increased 1.7 percent in December by more than expected, indicating Europe’s powerhouse is weathering the region’s debt crisis.

GBPUSD fell to a two-day low of 1.5728 during the London session due to damp risk sentiment which pushed investors to the safe haven US dollar.

Dollar also gained against the Swiss franc, pushing USDCHF to a session high of 0.9261 after rising steadily from the Asian low of 0.9188. Strong US jobs number on Friday is helping buoy the dollar. Meanwhile, threats of a Swiss National Bank intervention to change the euro-peg is keeping the Swiss currency from strengthening too far. This prevented the euro from falling further against the franc despite broad euro weakness. But gains in the EURCHF were capped at 1.2075 in European trading, and lows were at 1.2052.

EURJPY fell to 99.86 in Europe, edging down all morning from the Asian high of 100.47 as investors await the Greek debt deal. USDJPY remains supported above 76.55 where it has stalled into a range.

AUDUSD declined due to low risk appetite influenced by ongoing uncertainty about Greece. Further weighing on the aussie is speculation of a Reserve Bank of Australia’s interest rate cut tomorrow, fuelled by weak retail sales data today. AUDUSD fell to a low of 1.0682 in Europe, off a six-month high of 1.0793 hit on Friday.

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